Unfortunately that a Merton residential lease is a deteriorating asset. As the lease term diminishes so does the value of the property. The extent of this is not fully appreciated in the early years due to the loss of value being disguised by increases in the Merton property prices.Once your lease gets to 85ish years, you need to start considering a lease extension. An important point to note is that it is desirable for lease extension to take place before the term of the existing lease slips below eighty years - otherwise a higher amount will be due. The majority of flat owners in Merton will be able to extend under the legislation; however a lawyer should be able to confirm if you qualify for an extension. In some situations you may not qualify. There are also strict timeframes and procedures to follow once the process is instigated and you will need to be guided by your conveyancer from beginning to end of the formalities.
It is conventional wisdom that a property with in excess of 100 years remaining is worth approximately the same as a freehold. Where an additional 90 years added to all but the shortest lease, the property will be equivalent in value to a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage are not acceptable. Leases with fewer than 70 years should only be referred to the issuing office where the following scenario applies, as discretion may be applied subject to bank approval: • Property is located in any of the following prestigious developments: Cadogan, Crown, Grosvenor, Howard de Walden, Portman or Wellcome Trust Estates in Central London AND • The value of the property subject to the short remaining term is £500,000 or more AND • The loan to value does not exceed 90% for purchases, 90% like for like re-mortgages, 80% for re-mortgages with any element of capital raising and 80% for existing Barclays mortgage borrowers applying for additional borrowing; |
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| Godiva Mortgages | A minimum of 70 years unexpired lease at completion for all scheme types apart from Lifetime Mortgages (Equity Release), which require a minimum unexpired term of 80 years at completion. |
| Halifax | Minimum 70 years from the date of the mortgage. |
| Santander | You must report the unexpired lease term to us and await our instructions if: 1. the unexpired term assumed by our valuer is between 55 and 82 years, but the actual unexpired term differs by more than one year (whether longer or shorter); or 2. the unexpired term assumed by our valuer is more than 82 years but the actual unexpired term is less than 82 years; or 3. no valuation report is provided However, we will not accept a lease where on expiry of the mortgage: (i) less than 50 years remain and all or part of the loan is repaid on an interest-only basis: or (ii) less than 30 years remain and the loan is repaid on a capital and interest basis We will accept a lease that has been extended under the provisions of the Leasehold Reform Act 1993 provided statutory compensation would be available to the leaseholder. |
Regardless of whether you are a tenant or a landlord in Merton,the lease extension experts that we work with will always be happy to discuss any residential leasehold matters and offer you the benefit of their in-depth market knowledge and the close ties they enjoy with Merton valuers.
Last Summer Lucas, started to get near to the 80-year threshold with the lease on his garden apartment in Merton. Having purchased his home twenty years ago, the length of the lease was of minimal importance. by good luck, he realised he would soon be paying way over the odds for a lease extension. Lucas arranged for a lease extension just under the wire last May. Lucas and the landlord ultimately settled on the final figure of £5,000 . If he had missed the deadline, the sum would have increased by at least £1,150.
Mr and Mrs. P Martinez was assigned a lease of a first floor flat in Merton in October 2004. We are asked if we could shed any light on how much (roughly) price would likely be to prolong the lease by an additional years. Comparative homes in Merton with a long lease were valued around £261,600. The average amount of ground rent was £60 collected annually. The lease termination date was in 2078. Considering the 52 years remaining we estimated the compensation to the landlord for the lease extension to be between £39,000 and £45,000 plus professional charges.
Last Winter we were phoned by Mr and Mrs. Y Bailey , who purchased a ground floor apartment in Merton in April 2000. We are asked if we could estimate the compensation to the landlord would be to extend the lease by ninety years. Similar flats in Merton with 100 year plus lease were worth £218,000. The average ground rent payable was £45 invoiced yearly. The lease came to a finish on 24 April 2089. Given that there were 63 years left we estimated the premium to the freeholder to extend the lease to be within £17,100 and £19,800 exclusive of legals.